News Roundup: DCLG cuts, Manchester business loans, JV collapse, land release and HRA borrowing

DCLG should save 3% of budget in 2015-16
HM Treasury has announced that the DCLG will be expected to make savings of £230m during 2015-16, equivalent to 3% of its budget. The chief secretary to the Treasury, Greg Hands, wrote to government departments on 20 May, to ask them to identify savings and achieve underspends this year. Chancellor George Osborne said: “As everyone knows, when it comes to living within your means, the sooner you start the smoother the ride.”

Manchester offers business loans
Loans totalling £20m are to be offered to small business by Manchester City Council, underwritten by the Greater Manchester Combined Authority. GMCA is unable to make the loans directly, as its powers are currently restricted to transport. However, it will loan £6.5m to Manchester to cover potential defaults. The council will retain the interest to cover administration costs.

Middlesbrough JV plan collapses
Plans for a joint venture involving Middlesbrough council to deliver 18 services including building maintenance, school catering, refuse, parks management and highways have been scrapped. The council began exploring a deal with Norfolk County Council’s standalone company Norse in January. However, Middlesbrough mayor Dave Budd said this week: “After detailed discussions with a potential partner, we now believe such an arrangement would not achieve the added value originally envisaged.”

LGA: “TaxPayer’s Alliance wrong on assets”
The Local Government Association has slammed a new report from the TaxPayers’ Alliance which criticised the scale of council assets. Jonathan Isaby, chief executive of the TaxPayers’ Alliance, said: “It looks deeply hypocritical for councils to plead poverty as an excuse for hiking council tax when they’ve got such a huge asset portfolio. Local authorities should be focussed on essential services.” But an LGA spokesman said: “Assets, fund regeneration, housing and jobs for communities, improve the quality of life for residents and help keep down council tax.”

Clark encourages further town hall land releases
Communities secretary Greg Clark repeated the government’s call for councils to release surplus and redundant land and property for new homes. Clark repeated an announcement from March that the government is targeting the release of enough central government land to build 150,000 homes by 2020. And he added: “Councils are significant landowners and town halls should be looking at their estate, particularly brownfield sites, and thinking about how they could make better use of their holdings by releasing land for new homes for their communities.”

Nationwide ratings affirmed
Fitch Ratings this week affirmed Nationwide Building Society’s (Nationwide) long-term and short-term issuer default ratings at A and F1, respectively, and its viability rating at A. The Outlook on the Long-term IDR is Stable. Fitch said this reflected the society’s low overall risk appetite, strong franchise in the UK mortgage and savings markets, healthy and well performing loan book, conservative funding and liquidity profile and strengthened capital ratios. Nationwide’s support rating and support rating floor have been affirmed at 5 and no floor.

DCLG support for devolution councils
The acting director general for finance and corporate services at the Department for Communities and Local Government has been seconded to the Local Government to work on devolution. Andrew Campbell will offer advice to councils as they prepare for deals, and will also coordinate some of the LGA’s strategic digital work.

Council examines land options
Norfolk councillors have asked officers to come up with alternative proposals to selling off three sites to private developers. A report to Norfolk County Council said that selling the land could net £5m, but the property and resources committee has asked officers to look into whether the council could partner with a developer to achieve higher returns.

Planning charity calls for housing finance change
The Town and Country Planning Association has added its voice to those calling for a removal of the cap on housing revenue account borrowing. In a report this week, it said that lifting the cap would increase councils’ ability to deliver new social and affordable homes. It also called on ministers to reconsider whether investment in housing should be counted as part of the public sector borrowing requirement.

Serco boob leaves staff out of pocket
More than 450 staff at Lincolnshire County Council have been left out of pocket after an error by contractor Serco. The firm took over some finance and HT services for the council just two months ago. The staff, including teachers, have now had the missing money repaid to them.